That the following additional sum bo granted to His Majesty to defray the charges for the year 1941-42 for the services hereunder specified, viz.: -

Part I. - Departments and Services - Other than Business Undertakings and Territories of the Commonwealth.

An additional appropriation of revenue is rendered necessary by reason of the fact that more revenue is available for defence expenditure than was expected when the main appropriation was passed by Parliament. The budget estimate of total revenue on which the main appropriation was based for 1941-42 was £186,000,000. Of this, £104,000,000 was appropriated for purposes other than war and defence services, whilst £82,000,000 was set aside for the prosecution of the war. Since the budget was passed, various factors have combined to increase the amount of revenue available for the services of the year. The most important of these factors was the war taxation imposed in December, 1941, after the budget had been passed by Parliament. This consisted of an addition to the' income tax on individuals by means of a special war tax designed to yield £8,000,000 in the current financial year, and an increase of the tax on companies to yield an additional £4,000,000, making £12,000,000 in all. No appropriation was made in respect of the yield expected from these increased taxes, it being deferred pending a clearer view of the result of the year's finances. It is now apparent that the receipts under certain other heads of revenue will exceed expectations. The main increases over the budget estimates are: -

Customs and Excise, £6,000,000. This increase is due to two factors, viz., a continuance of overseas trade at a higher level, and greater consumption of excisable goods, than had been expected.

Sales Tax, £2,000,000. This increase is due to greater volume of trade resulting from the increased purchasing power of the community, and the increase of rates imposed in April last.

Collections under other heads of revenue show a tendency to exceed the estimates and, in addition, there will probably be a net saving on the various heads of expenditure other than war and defence services. These factors together will probably necessitate an appropriation of, say, a further £22,500,000. It will be appreciated, however, that it is difficult in present circumstances to provide exact estimates even for short periods. In order to ensure an adequate margin for other possible excess revenue collections which cannot at the moment be foreseen, an appropriation of £25,000,000 is being sought in this measure.

When the budget was brought down in October last, the total war expenditure was estimated at £221,000,000, of which about £139,000,000 was to be provided from the loan fund. Since then, our commitments have greatly increased.

With the entry of Japan into the war it became necessary for us to increase and accelerate our war effort. Many more men have been called into the Army, munitions production has been still further expanded, additional defence works have been undertaken, and in every direction we are faced with considerably increased expenditure in our preparations to prosecute the war with vigour. Allied troops have arrived in Australia to assist in its defence and that of the south-west Pacific area. This has involved additional expenditure under what is known as reciprocal lease-lend. Present indications are that our war expenditure for the year will probably reach approximately £300,000,000, of which about £194,000,000 must be found from loans. The £300,000,000 represents an increase of £80,000,000 on the original programme. Of this £80,000,000, as already stated, £25,000,000 may be found from revenue, leaving £55,000,000 to be charged to loan fund. This additional estimate and revenue appropriation is shown in theschedule to the bill.

I give the following table to show the amounts, including the present £25,000,000, which will be appropriated to meet defence expenditure in 1941-42 : -

In the main appropriation, the total amount estimated to be expended, £221,000,000, was shown under the votes for the various services. In this additional appropriation it is not so shown, but the divisional allocation will be set out in Supplementary Estimates when the requirements of the respective departments are definitely known.